China's economic surge raises world recovery hopes

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Figures published in Beijing showed gross domestic product was 11.9% higher in the first quarter of the year than it was 12 months earlier. It was the strongest performance since early 2007 and Asian stock markets rallied on the news.

The price of oil was up 11 cents to $85.95 on hopes that China will drive a global recovery.

The optimism failed to spread to Britain, however, where consumer confidence plunged at the sharpest rate since the start of the recession.

Nationwide's index of sentiment fell from 81 in February to 72 in March — the biggest fall since July 2008 — as the upcoming general election fuelled doubts about the economy.

Martin Gahbauer, chief economist at Nationwide, said: "With an election looming, more people will be unsure as to whether they will be better or worse off in the coming months.

"Recent concerns about the state of the economy and employment prospects could still be playing on the minds of consumers."

The rapid pace of growth in China coincided with lower than expected levels of inflation, easing pressure on Beijing to raise interest rates which would slow the recovery. Inflation hit 2.2%, well below the 3% target.

But the State Council raised mortgage rates and down payment requirements today to cool the property market. The signs of a property bubble were shown by a 35.1% year-on-year rise in real estate investment, according to the National Bureau of Statistics.

The down payment on first homes of more than 90 square metres rises to 30% from 20% and the down payment on second homes rises to 50% from 40%. Banks must set mortgage rates on second homes at a minimum of 1.1 times the central bank's benchmark interest rate.

"We have got off to a good start this year," a Chinese spokesman said.